Suggested Readings about the Crisis in American Higher Education

Each fall, I offer diligent readers of this blog some tips to the best books that I’ve read over the past year. My regular review is coming next month. But herewith you get an early bonus: a list of suggested readings that will help you to grasp the breadth of controversy and criticism around American higher education. For the past several years, I’ve pursued a private inquiry into the crisis in higher ed because as an academic leader I’ve seen aspects of the crisis and wanted to make sense of what was going on. Anyone who cares about higher ed should invest time and attention accordingly.

The following 43 books and 21 articles are the unadulterated list of my readings to date, the “full monty,” so to speak. I can’t say that I like or endorse all of these items. But just as you can’t really understand capitalism without knowing its critics, I suggest that you can’t understand what is going on in higher ed without reading across some of the good, bad, and ugly. For many of these items, I offer some highlights and/or memorable quotes to help you anticipate what is inside. Because some of my notes cross-reference other items on the list, I give each book a numbered reference and each article an alphabetical reference. In a future post, I’ll follow up with a synthesis or summary of takeaways from these readings.  In a future post, I’ll follow up with a synthesis or summary of takeaways from these readings.

Meanwhile, I encourage you to embark on your own reading program on higher education.

1. Amis, Kingsley, Lucky Jim, New York: Penguin, 1954. A classic satire about faculty politics and the flaws of academic tenure. Memorable quote: “there were compensations for ceasing to be a lecturer, especially that of ceasing to lecture.” (pg. 233)

2. Arum, Richard, and Josipa Roksa, Academically Adrift: Limited Learning on College Campuses, Chicago: University of Chicago Press, 2011. The authors present a good summary of evidence for underperformance of American higher education, as indicated by measures such as graduation rates and learning. The focus of the authors’ original research is changes in academic engagement between students and faculty, and in instructional climates–think of metrics such as numbers of meetings of a student with a professor or of the number of hours studying per week or the number of pages of required writing or reading per course. Memorable quote: “when faculty have high expectations and expect students to read and write reasonable amounts, students learn more. In addition, when students report that they have taken a class in which they had to read more than 40 pages a week and write more than twenty pages over the course of a semester, they also report spending more time studying: more than two additional hours per week than students who do not have to meet such requirements. Thus, requiring that students attend to their class work has the potential to shape their actions in ways that are conducive to their intellectual development.” (p. 119) Alexander Astin [A] criticized the study’s statistical techniques and measurement instrument—similar claims could be applied to a broad cross-section of research in the social sciences. It is possible that learning gains are better than Arum and Roksa reported. Even so, the book remains important as an example of statistically-driven criticism of higher education that prompts vigorous and learned debate.

3. Baumol, William J., The Cost Disease: Why Computers Get Cheaper and Health Care Doesn’t, New Haven: Yale University Press, 2012. This book presents an interesting counterpoint to the assertion that costs in higher education are out of control. Baumol writes, “The cost disease asserts that the costs of health care, education, the live performing arts, and a number of other economic activities known as the “personal services,” are condemned to rise at a rate significantly greater than the economy’s rate of inflation, as indeed they have…This is so because the quantity of labor required to produce these services is difficult to reduce.” (p. xvii) To present a Haydn quartet still requires four accomplished musicians. Memorable quote: “Not the least of the problems we face is the difficult task of helping the public recognize the difference between the reality and the illusion of the cost disease. For instance, it surely will be difficult to convince intelligent nonspecialists that although costs of personal services appear to be out of control, they are actually falling in terms of the labor-time required to earn enough to pay for them.” (p. 63)

4. Bennett, William J. and David Wilezol, Is College worth It? Nashville: Nelson, 2013. The average results of high ROI from a college education mask the fact that the returns are asymmetrically distributed: students who attend elite schools really do benefit from a college education; for the rest, the returns are much lower. Taking the premise of asymmetry, the memorable message of this book is: “Two-thirds of the people who go to four-year colleges right out of high school should do something else.” (p. vii)

5. Bloom, Alan, The Closing of the American Mind: How Higher Education has Failed Democracy and Impoverished the Souls of Today’s Students, New York: Simon and Schuster, 1987. The 1960s and 1970s saw a shift in thinking about college curricula and the general learning experience of higher education. Bloom’s book surveys and strongly criticizes this shift and had a strong impact on criticisms of higher ed in the ensuing decades.

6. Bok, Derek, Our Underachieving Colleges: A Candid Look at How Much Students Learn and Why They Should Be Learning More, Princeton: Princeton University Press, 2006. This is one of the best comprehensive summaries of what ails higher education. Well written, objective, well-documented, empathetic toward higher ed, and yet insistent on a higher standard. Memorable quote: “The good news is that most of the serious deficiencies can be overcome, at least to a significant degree given the will to do so. The bad news is that most of the problems are not being seriously addressed on campuses today, nor will they be until they are correctly identified and clearly understood by those responsible for the quality of teaching and learning in our colleges.” (p.10)

7. Bok, Derek, Universities and the Future of America, Durham: Duke University Press, 1990. Bok considers what universities and the application of science can do to enhance productivity in the economy.

8. Bok, Derek, Universities in the Marketplace: The Commercialization of Higher Education, Princeton: Princeton University Press, 2003. Bok addresses “efforts within universities to make a profit from teaching, research, and other campus activities.” Is this necessarily bad? The numerous examples that Bok presents suggest ways in which academia and business collaborate to produce gains for society. But the costs and impact of those efforts are at issue. This is a very well-written and objective assessment of the pros and cons of commercialization. Favorite quote: “Universities share one characteristic with compulsive gamblers and exiled royalty: there is never enough money to satisfy their desires.” (p.9)

9. Bruner, Robert (ed.) Globalization of Management Education: Changing International Structures, Adaptive Strategies, and the Impact on Institutions. Tampa: AACSB, 2011. This study combines field interviews and large-sample surveys to document the extent and trends of cross-border engagement in management education.

10. Brynjolfsson, Erik, and Andrew McAfee, The Second Machine Age: Work, Progress, and Prosperity in a time of Brilliant Technologies, New York: Norton, 2014. Memorable quote: “Technological progress is going to leave behind some people, perhaps even a lot of people, as it races ahead. As we’ll demonstrate, there’s never been a better time to be a worker with special skills or the right education, because these people can use technology to create and capture value. However, there’s never been a worse time to be a worker with only ‘ordinary’ skills and abilities to offer, because computers, robots, and other digital technologies are acquiring these skills and abilities at an extraordinary rate.” (p. 11)

11. Christensen, Clayton M., and Henry J. Eyring, The Innovative University: Changing the DNA of Higher Education from the Inside Out, New York: Jossey-Bass, 2011. This book extends Clayton Christensen’s theory of “disruptive innovation” to higher education. They argue that professors and administrators do not see what is about to hit them in the form of new technology, leaner for-profit schools, demographic change, and changing needs of society. The result is that the dominant model of higher education (the research university epitomized by Harvard) is unsustainable for most universities, who will be displaced by very lean schools (such as BYU-Idaho). Memorable quote: “The burning question highlighted by 2008’s downturn is not whether the great research universities, such as Berkeley and UCLA, and Harvard, are cost-justified, but whether the less powerful ones, which comprise the vast majority, can continue as they have in the past. The schools most at risk are the more than 700 public and not-for-profit universities that grant graduate degrees but are not among the 200 elite research institutions.” (p. 195) The concept of “disruptive innovation” offers valuable insights, yet it has metastasized in popular usage—I recommend reading this book along with a critical review by Jill Lepore [P].

12. Christensen, Clayton M., Michael B. Horn, and Curtis W. Johnson, Disrupting Class: How disruptive Innovation Will Change the Way the World Learns, New York: McGraw-Hill 2008. This book applies Christensen’s theory of disruptive innovation to K-12 education in America. The authors argue that standardization conflicts with the need for customization of the learning experience for students. Technology can help to resolve the conflict: “flip” the classroom so that common material (lectures, examples, didactic material) can be delivered by tablet each evening, and the classroom time can be devoted to working through problems and examples in the presence of the teacher. Memorable quote: “What our studies of innovation show, however, is that a specific type of innovation, which we call disruption, almost always trips up well-managed improving companies. Disruption is difficult because the definitions and trajectories of improvement change. What were valuable improvements before the disruption now are less relevant. And dimensions of the product that had been important become highly valued.” (p. 44)

13. Cole, Jonathan R., The Great American University: Its Rise to Preeminence; Its Indispensable National Role; Why It Must Be Protected, New York: Public Affairs 2009. Very well written, though self-congratulatory and even nationalistic at times. One of the best rebuttals to critics of American higher education: deeply grounded in the history of universities; extensively documented; highlights major contributions to society; a spirited defense of academic freedom. I recommend it highly as it contains many valuable insights. Resonant quote, “We must fortify and protect our great universities, or, to paraphrase Winston Churchill in another context, we are apt to crumble from within before we crumble from without.” (p. 469).

14. Damrosch, David, We Scholars: Changing the Culture of the University, Cambridge: Harvard University Press, 1995. Wonderfully argued down to an obvious point: universities would benefit from more, rather than less, collaboration. The absence of collaboration is due to the gradual build-up of specialization, arcane research methodologies, and scholarly alienation. Favorite quote: “scholars should be able to do better at working together and at listening to one another.” (p. 186)

15. Delbanco, Andrew, College: What it Was, Is, and Should Be, Princeton: Princeton University Press, 2012. Delbanco decries the vocationalism with which many students come to the college experience. He presents an alternative vision of college as an intense episode of discovery of ideas and ways of thinking. And he argues that access to the true college experience is dwindling rapidly.

16. Edmundson, Mark, Why Teach? In Defense of a Real Education New York: Bloomsbury, 2013. An essay on learning in college (not so much about teaching) by a colleague at University of Virginia. He argues that too much of college education is about preparing people to “slide into a social machine and function smoothly with a little application from time to time of the right pleasing grease. Education now prepares us for a life of conformity and workplace tedium…But what we want is real learning–learning that will help us see the world anew and show us that there could be more to our lives than we had thought.” (p xii). His chapter, “A Word to the Incoming Class,” is inspiring and worth the price of the book. So is the chapter, “Glorious Failure,” his convocation address in 2005. Memorable quotes: “The proper business of teaching is change–for the teacher (who is herself a work in progress) and (preeminently) for the student.” (p. 165) And “I’d like us to blow a hole through the university’s ethos of entertainment and training for success and to bury its wearisome work-hard, play-hard frat-boy ideology. We should blast away the customer coddling deans and student service hacks; blast past academic pretension and the hunger for “standing in the field.” Blast university presidents so afraid of offending a potential donor that they won’t raise a word in behalf of social justice or political sanity. Blow away the trustees who think that they’re a corporate board of directors and will not rest until their schools resemble Walmarts. Blast them all. And while you’re doing it, have a good time. Because knowledge is joy. Creativity is ultimate freedom. Real thought is bliss. Sapere Aude, as the old thinker liked to say: Dare to Know; Dare to be Wise.” (p. xiv) Edmundson’s violent imagery (“blast” and “blow away”) suggests the passions that some professors display toward student culture and university leaders.

17. Ginsberg, Benjamin, The Fall of the Faculty: the rise of the All-Administrative University and Why It Matters, Oxford: Oxford University Press, 2011. A polemic against the rise of staff and administration in higher education. Well-documented but suffers a bit from its sarcasm and over-blown style. Memorable quote: “It is because it is such a unique institution that it is so important to save the university from its deanlets. But the rescue mission is belated and not certain to succeed. The blight of the all-administrative university is spreading from campus to campus, from the community colleges to the private research universities, as deanlets copy one another’s best practices, expand their already bloated administrative ranks, and use financial crises to further erode the autonomy of the faculty.”

18. Goldin, Claudia, and Lawrence F. Katz, The Race Between Education and Technology, Cambridge: Harvard University Press, 2008. This book presents an excellent survey of the history and current status of the relationship between economic growth and education. Is the relationship across countries and time between income per capita and education truly causal or merely coincidental? This question is motivated by the observation that growth in educational attainment in America stagnated in the last quarter of the 20th Century–could that be a cause of stagnating economic growth? The authors find a significant association between education and growth in productivity and that the association weakened in the late 20th Century. This weakening is due in part to “skill-biased technological change” and to the changing demand for skills in the economy. Richly documented with original research. Though aimed mainly at K-12 education, the research presented here has important implications for higher education. Memorable quote: “Throughout this volume we have emphasized the existence of an ongoing and relentless race between technology and education. Economic growth and inequality are the outcomes of the contest. As technological change races forward, demands for skills–some new and some old–are altered. If the workforce can rapidly make the adjustment, then economic growth is enhanced without greatly exacerbating inequality of economic outcomes. If, on the other hand, the skills that are currently demanded are produced slowly and if the workforce is less flexible in its skill set, then growth is slowed and inequality widens. Those who can make the adjustments as well as those who gain the new skills are rewarded. Others are left behind.” (p. 352)

19. Graff, Gerald, Clueless in Academe: How Schooling Obscures the Life of the Mind, New Haven: Yale University Press, 2003. Very well-written discussion of what should be the aims and activities of a college education. The final chapter, “How to Write An Argument: What Students and Teachers Really Need to Know,” is outstanding. The author’s thesis is that academicians don’t explain themselves very well: academia is different from the rest of society, but for good reasons. Memorable quote: “academia reinforces cluelessnesss by making its ideas, problems, and ways of thinking look more opaque, narrowly specialized, and beyond normal learning capacities than they are nor need to be. As I see it, my academic intellectual culture is not at all irrelevant to my students’ needs and interests, but we do a very good job of making it appear as if it is.” (pg. 1)

20. Hacker, Andrew and Claudia Dreifus, Higher Education? How Colleges are Wasting our Money and Failing Our Kids–And what We Can Do About It, New York: Henry Holt, 2010. These authors criticize universities for their rising cost, falling impact, vocationalism, devotion to sports and entertainment, etc.–in all this book is a comprehensive survey, reasonably documented, of the ailments of higher ed. The central thesis: schools have lost their way because of inattention to their core mission. The authors provide a longish list of remedies. Memorable quote: “higher education should be open to every young person, and this is an option we can well afford. We confess to being born-again Jeffersonians: we believe everyone has a mind, the capacity to use it, and is entitled to encouragement. Of course, students have to do their share. But the adults who have chosen higher education as their profession have even greater obligations, which we’re not convinced they’re fulfilling.” (p.3)

21. Kerr, Clark, The Uses of the University, Cambridge: Harvard University Press, 1963. Kerr was an iconic proponent of the enlargement of the “multiversity.” And yet, this former Chancellor of the University of California describes academia as especially hidebound: “Few institutions are so conservative as the universities about their own affairs while their members are so liberal about the affairs of others.” (p.99)

22. Lanier, Jared, Who Owns the Future? New York: Simon & Schuster, 2013. Lanier is an extremely thoughtful critic of Web 2.0 and its claims on users. He argues that technology is eliminating the middle class and that academic tenure helps to preserve that middle class.

23. Lewis, Harry R., Excellence Without a Soul: Does Liberal Education Have a Future?, New York: PublicAffairs, 2006. Written by a longstanding faculty member and Dean at Harvard, this book challenges higher education to consider a larger mission, not only to increase knowledge, but to grow wisdom. Lewis sustains the view that teaching is a moral act, which higher education forgot as it evolved. Memorable quote: “over the decades, I have heard many academic discussions about teaching, about the curriculum, about grading, about athletics, and about responding to student misdeeds. I have almost never heard discussions among professors about making students better people. Professors are warned to look for signs of emotional distress in students and to steer them to mental health services. But what most students needs more than psychiatric referrals is help shaping the lives that they themselves, and not their parents, will lead. Presidents, deans, and professors rarely tell students simple truths, for example that the strategizing and diligence that got them into the college of their choice may not, if followed thoughtlessly, lead to an adult life they will find worth living.” (p. xv)

24. Menand, Louis, The Marketplace of Ideas: Reform and Resistance in the American University, New York: Norton, 2010. This is an outstanding essay on the “professionalization” of academia: the solidification and subdivision of disciplines and fields; the monopolization of the production of knowledge and even the producers of that knowledge; the surge in government grants after WWII that supported this trend. Menand writes that “Academic inquiry, at least in some fields, may need to become less exclusionary and more holistic.” Fundamentally, this book is about the difficulty with which academia embraces interdisciplinary work–a highly relevant issue to the unfolding debates about the ability of higher education to deliver relevant learning. Memorable quote: after a transformational change in the 1970s, “was clearly a reaction against the model created by the Golden Age and the academic revolution: the model of disinterested research and the great books, or “Western Civ” curriculum. The vocabulary of “disinterestedness,” “objectivity,”‘ “reason,” and “knowledge,” and talk about things like “the scientific method,” “the canon,” and “the fact/value distinction” began to be superseded, particularly in the humanities by attention to “interpretations” (rather than “facts”), “perspective” (rather than “objectivity”), and “understanding” (rather than “reason” or “analysis”). An emphasis on universalism or “greatness” was replaced by an emphasis on diversity and difference; the scientistic norms that once prevailed in many of the “soft” disciplines began to be viewed with skepticism (though a very rigorous skepticism); context and contingency were continually appealed to; attention to “objectives” gave way to attention to “representations. ” (pgs. 80-81)

25. Mettler, Suzanne, Degrees of Inequality: How the Politics of Higher Education Sabotaged the American Dream, New York: Basic Books, 2014. The book argues that political partisanship is killing the historical American value of access to higher education, and the attendant promise of economic mobility and the American Dream. Congress is the villain in her view.

26. Newman, John Henry, The Idea of a University Defined and Illustrated. Edited by I.T. Ker. Oxford: Clarendon, 1976. One of the classic expressions of what a liberal education should be.

27. Nussbaum, Martha, Not for Profit: Why Democracy Needs the Humanities, Princeton: Princeton University Press, 2012. This book is a defense of the liberal arts in an age of rising vocationalism among students.

28. Pelikan, Jaroslav, The Idea of the University: A Reexamination. New Haven: Yale University press, 1992. A rejoinder to John Henry Newman’s book, Pelikan reviews the concept of the university in light of its new context in the late 20th Century.

29. Ravitch, Diane, the Death and Life of the Great American School System: How Testing and Choice Are Undermining Education, New York: Basic Books, 2010. This is a provocative and penetrating critique of government policy as it relates to K-12 education in America. It is especially relevant to higher education as part of the broader debate about education in America around standards of learning and accountability for results–my hunch is that this debate is headed toward higher ed, if not already there. Memorable quote: “the next wave of school reform is bearing down on us. It will be packaged as the sine qua non of the twenty-first century: online learning…But for most purposes, students need teachers as well as one another. Students require a wise and experienced person who offers encouragement, who presents the subject in a compelling matter, who sets standards of personal conduct, who monitors more than a blinking screen. Minds develop in response to the social interaction of a lively classroom, where learners debate, discuss, and exchange ideas. Some things are best done alone, such as reading, writing, practicing an instrument, and reflecting. Others are best done in groups, such as singing in a chorus, performing in an orchestra, acting in a play, playing team sports, discussing a novel, or debating a historical controversy.” (p. 283)

30. Reisman, David, On Higher Education: The Academic Enterprise in an Era of Rising Student Consumerism, San Francisco: Jossey-Bass, 1980. This book, as the title implies, is a collection of thoughts on the rise of student consumerism post-World War II.

31. Rosovsky, Henry, The University: An Owner’s Manual, New York: Norton, 1990. A classic summary of the view of a powerful insider, a Dean. Must-read for any deanly aspirants. Rosovsky’s view is that excellence is obtained through good governance. The memorable quotes are from Rosovsky’s principles: “Not everything is improved by making it more democratic…There are basic differences between the rights of citizenship in a nation and the risks that are attained by joining a voluntary organization…rights and responsibilities in universities should reflect the length of commitment to the institution…In a university, those with knowledge are entitled to a greater say…In universities, the quality of decisions is improved by consciously preventing conflict of interest…University governance should improve the capacity for teaching and research…To function well, a hierarchical system of governance requires explicit mechanism of consultation and accountability.” (pgs. 262-277)

32. Selingo, Jeffrey, College (Un)Bound: The future of Higher Education and What it Means for Students, Boston: Houghton Mifflin, 2013. Written for an audience of parents and (prospective) students, this book gives an excellent overview of the crisis in American higher education and its sources–and how a prospective student should be a wise consumer. Memorable quote: “Higher education also suffers from mission creep. Every college has a mission about the students it aims to enroll and the public it wants to serve. But too many colleges, unhappy with their mission, aspire to move higher in the pecking order. Prestige in higher education is like profit to corporations.” (p. 12)

33. Shapiro, Harold T., A Larger Sense of Purpose: Higher Education and Society, Princeton: Princeton University Press, 2005. This former President of Princeton and University of Michigan addresses ethical dilemmas arising from the engagement of universities with society (especially corporate partnerships and sports). Memorable quote: “For the foreseeable future, existing colleges and universities will be faced with the challenge of sustaining society’s most important values, demonstrating sufficient adaptability to fill new and/or modified roles, and exerting sufficient leadership to help society shape new cultural commitments and expand others. Although this portfolio of responsibilities represents a significant challenge for faculty, administrators, and trustees, a great deal is at stake, namely, the continued social relevance of institutions of higher education. If such leadership should falter, it would not be the first time that a significant social institution was replaced, in whole or in part, by other institutions better able to articulate and meet society’s evolving needs.” (p. 11)

34. Sykes, Charles J., ProfScam: Professors and the Demise of Higher Education, Washington D.C.: Regnery Gateway, 1988. A polemic that marshals an array of research and anecdotes to motivate an agenda. Unobjective and uncritical assessment of the sources cited. Nor does it seek to explore why higher education has evolved the way it has. But this is one of the most highly-cited books by critics of higher education. The author advocates the elimination of tenure, suspension of the research mission, mandating a full(er) teaching load, open disclosure of workloads, and reimposition of the Western Canon of ideas. This, from page 4, summarizes the other 292: ” The story of the collapse of American Higher Education is the story of the rise of the professoriate. No understanding of the academic disease is possible without an understanding of the Academic Man, this strange mutation of the 20th-century academia who has the pretensions of an ecclesiastic, the artfulness of a witch doctor, and the soul of a bureaucrat.”

35. Thacker, Lloyd, College Unranked: Ending the College Admissions Frenzy, Cambridge: Harvard University press, 2004. This is a collection of essays by college admissions directors on the subject of the “admissions crisis”: the rapid commercialization of the admissions process; the influence of rankings; surge in admissions-related spending by institutions; marketing and branding; etc. A sobering representation of a prisoner’s dilemma in higher education: everyone must spend more and compete harder; no one is better off. A quote: “the new obsession with numbers is counter-educational; that it makes for a less educated and less educable kind of student; a less thoughtful, more cynical, more boring, and more exhausted kind of student, not at all the kind of student that colleges on a clear day know they want and need.” (p. 62)

36. Trachtenberg, Stephen Joel, Big Man on Campus: A University President Speaks out on Higher Education, New York: Simon and Schuster, 2008. A memoir of service as President of a major university: candid, amusing, and sobering–must-read for Presidential aspirants. This book serves as a healthy counterpoint to critics who charge senior administrators with the decline of higher education. Trachtenberg’s view is that oversight of a major university is complex, demanding, and challenging work. Memorable quote: “I often think that presidents of universities are a lot like the untouchables in India. The role of the untouchables is to do the work that must be done but nobody wants to do. Burying the dead and collecting trash are two examples. But because they take on dirty jobs, the untouchables are themselves considered dirty. There are things that have to be done for the benefit of universities, people that have to be seen, and issues that have to be addressed that have nothing to do with you yourself but rather with the office.” (pg. 151)

37. Turkle, Sherry, Alone Together: Why We Expect More from Technology and Less from Each Other, New York: Basic Books, 2011. A provocative exploration of how our devices and computer-mediated communication change social interaction–possibly for the worse. Instructors today will see evidence of these changes in their classrooms and hallways. Turkle writes, “As we instant-message, e-mail, text, and Twitter, technology redraws the boundaries between intimacy and solitude…Tethered to technology, we are shaken when the world “unplugged” does not signify, does not satisfy…Does virtual intimacy degrade our experience of the other kind and, indeed, of all encounters, of any kind?” (pgs. 11-12)

38. Veblen, Thorstein, The Higher Learning in America: A Memorandum on the Conduct of Universities by Businessmen, New York: B.W. Heubsch, 1918. Perhaps the earliest expression of opposition to “corporatism” by universities.

39. Vedder, Richard, Going Broke by Degree: Why College Costs Too Much, Washington D.C.: American Enterprise Institute, 2004. This book is a sharp critique of the efficiency of American higher education, supported by careful research and an economist’s rigor. Vedder is quoted frequently in the media. He opposes government support for universities and recommends increasing the student-faculty ratio; ending tenure; increasing the use of part-time or adjunct faculty; and using capital-intensive instructional techniques (such as information technology). Memorable quote: “Why are universities inefficient and costly?…universities operate in a radically different environment than most business enterprises…there are four major reasons for rising costs: third-party providers, the lack of market discipline, ineffective price competition, and government regulation.” (p. 24)

40. Whitehead, Alfred North, “Universities and Their Function,” Chapter 7 in the Aims of Education and Other Essays, New York: Free Press, 1927. This presents a range of insights that have influenced the development of universities for decades since and is an influential essay on the tension between education for mastery versus education to promote imagination, creativity, and innovation. Memorable quote: “necessary technical excellence can only be acquired by a training which is apt to damage those energies of mind which should direct the technical skill. This is the key fact in education and the reason for most of its difficulties.” (p. 96)

41. Wildavsky, Ben, The Great Brain Race: How Global Universities are Shaping the World, Princeton: Princeton University Press, 2010. The author documents significant trends in the founding of schools globally, the mobility of students, and the rise of “free trade in minds.” Memorable quote: “The globalization of higher education should be embraced, not feared. The worldwide competition for human talent, the race to produce innovative research, the push to extend university campuses to multiple countries, and the rush to produce knowledgeable and creative graduates who can strengthen increasingly knowledge-based economies–all of these trends are hugely beneficial to the entire world. Increasing knowledge is not a zero-sum game.” (p.7)

42. Wolfe, Tom, I Am Charlotte Simmons, New York: Farrar, Straus, Giroux, 2004. A blistering satire about undergraduate life. Both compelling and dispiriting to an educator. Early on, a statement by one of the students sets the tone for the whole spectacle: referring to his fraternity and University he says “it’s a MasterCard…for doing whatever you want…whatever you want.” Pivotal quote: “Charlotte looked at him in a teacherly fashion. “You know what ‘liberal arts’ means?” Pause. Rumination “…No.” “It’s from Latin?” Charlotte was the very picture of patience. “In Latin liber means free? It also means book, but that’s just a coincidence, I think. Anyway, the Romans had slaves from all over the world, and some of the slaves were very bright, like the Greeks. The Romans would let the slaves get educated in all sorts of practical subjects, like math, like engineering so they could build things, like music so they could be entertainers? But only Roman citizens, the free people?–Liber?–could take things like rhetoric and literature and history and theology and philosophy? Because they were the arts of persuasion–and they didn’t want the slaves to learn how to present arguments that might inspire them to unite and rise up or something? So the ‘Liberal’ arts are the arts of persuasion and they didn’t want anybody but free citizens knowing how to persuade people.” Jojo looked at her with arched eyebrows and a compressed smile, a smile of resignation and began nodding, nodding nodding nodding. Dawn was breaking inside that big head of his. “So that’s what we are…athletes–we’re like slaves. They don’t even want us to think. All that thinking might distract us from what we were hired for.” (p. 195-6)

43. Zumeta, William, David Breneman, Patrick Callan, Joni Finney, Financing American Higher Education in the Era of Globalization, Cambridge: Harvard Education Press, 2012. This book considers the financing of American higher education drawing on a perspective of the numerous forces of change bearing on the field.


A. Astin, Alexander, “In ‘Academically Adrift,’ Data Don’t Back Up Sweeping Claim” Chronicle of Higher Education, February 14, 2011.”

B. Barrett, Paul M., “Four Blunt Points About UNC, College Sports, and Academic Corruption,” Bloomberg BusinessWeek, January 20, 2014.

C. Block, Gene D., “Keep public Universities Public,” Time, October 29, 2012, page 44. Memorable quote, “Twenty years ago, tuition at UCLA was $1,624 (or $2,564 in today’s dollars). This year tuition is $12,192. Why has the cost gone up so much? Because…California has slashed per-student spending 60%. Other states have made similar cuts. We’ve cut spending, but beyond that, the only alternative to tuition hikes is to offer fewer courses to a larger number of students–a combination that would likely result in delayed graduations and more-restricted career opportunities.”

D. Botstein, Leon, “Resisting Complacency, Fear, and the Philistine: the University and Its Challenges,” Hedgehog Review July 2013. Memorable quote: “the fact is that an inefficient institution designed to be creative and innovative–which is what universities are–is one for which one has to resist the argument of industrial and bureaucratic rationalization. A university is an irrational place, a messy place; it needs to be defended as such…[But] We have allowed the American university to be a farm team for professional sports. We have not defended the university by its primary contributions to knowledge, culture, and scholarship–even to the economy.”

E. Brooks, David, “The Practical University,” New York Times, April 5, 2013. Memorable quote: “the problem with the current seminars is that it’s really hard to know what anybody gets out of them. The conversations might be lively, but they flow by so fast you feel as if you’re missing important points and exchanges. The goal should be to use technology to take a free-form seminar and turn it into a deliberate seminar (I’m borrowing Anders Ericsson’s definition of deliberate practice). Seminars could be recorded with video-cameras, and exchanges could be reviewed and analyzed to pick apart how a disagreement was handled and how a debate was conducted. Episodes in one seminar could be replayed for another. Students could be assessed, and their seminar skills could be tracked over time.”

F. Carey, Kevin, “Americans Think We Have the Best Colleges. We don’t.” New York Times, June 28, 2014.

G. Carlson, Scott, “Administrative Hiring Drove 28 Percent Boom in College Work Force, Report Says,” Chronicle of Higher Education, February 14, 2014, Pg. A3.

H. Carlson, Scott, “Survey Suggests Colleges Aren’t Ready for New higher-Education Landscape,” Chronicle of Higher Education, December 6, 2013, pg. A2. A report on Moody’s report, foreseeing a decline in net tuition revenue.

I. Chait, Richard P., and Zachary First, “Bullish on Private Colleges: On the enduring Strengths of Institutions of Higher Education,” Harvard Magazine, November-December 2011, pages 35-39. An optimistic outlook for American higher education.

J. Hockenos, Paul, “University Watch’ Scrutinizes Corporate Influence,” Chronicle of Higher Education, February 14, 2014, pg. A23.

K. James, William, “The Ph.D. Octopus,” Harvard Monthly, 36 (1903):1-9.

L. Kim, E. Han, Adair Morse, and Luigi Zingales, “Are elite universities losing their competitive edge?” Journal of Financial Economics, Vol 93, Issue 3, September 2009, pages 353-381.

M. Kolowich, Steve, “Colleges’ Doubts About MOOCs Continue to Rise, Survey Finds,” Chronicle of Higher Education, January 24, 2014, pg. A17.

N. Leonhardt, David, “Getting Into the Ivies: It’s Harder than it used to be. Colleges are more globalized” New York Times, April 27, 2014,

O. Leonhardt, David, “Is College Worth It?” New York Times, May 27, 2014.

P. Lepore, Jill, “The Disruption Machine,” New Yorker, June 23, 2014.

Q. Marcus, Jon, “Moody’s: College Money Woes are Getting Worse,” Hechinger Report, November 22, 2013.

R. Moody’s Investor Services, “Governance Stress and Economic threats Facing US Higher Education” July 1, 2012.

S. Ripley, Amanda, “Reinventing College,” Time, October 29, 2012 p. 41.

T. Selingo, Jeffrey, “The Innovative University: What College Presidents Think About change in American Higher Education,” Chronicle of Higher Education, 2014.

U. Strauss, Ben, “The Big Ten’s Bigger Footprint,” New York Times, December 1, 2013, page 6.

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Time to Fix Your Debt?

Student debt has been in the news a lot lately, mainly because of its sheer size: some $1.2 trillion of it is outstanding, more than any other class of consumer loans in America. In previous postings (see this and this) I have argued that borrowing to finance your education is a rational strategy, given the high return on investment from getting a solid education and a degree from a serious school. Yet the media abound with stories of students and graduates who borrowed and today find themselves in financial distress. The problem stories we’ve heard about have dealt with people who don’t finish their degrees (about 63% of all college and university students who enroll), who graduate from diploma mills that do little to screen and prepare students for life, or who don’t make use of school to truly strengthen their human capital. Though we wish these borrowers had shown more savvy and commitment, they also deserve our sympathy: they learned too late that debt is a remorseless ruler. One hopes that as the American economy gains strength, we’ll hear fewer of these stories.

Will there be an “Act II” of the student loan crisis? Will rising interest rates throw more student borrowers into distress? What should student borrowers do to protect themselves? Let’s consider this situation.

The Context

Fed Chairman Janet Yellen has announced the likelihood that the Fed will cease buying U.S. Treasurys in October. This is the end of Quantitative Easing the artificial depression of interest rates that was intended to stimulate the growth of the American economy. It is expected that interest rates will rise as the Fed unshackles the debt markets—how fast and orderly that occurs is anyone’s guess. In consequence, student loans whose interest rates “float” with market conditions will become more expensive. The portion of those graduates who have been meeting their obligations, but doing so with difficulty, might sink into distress. Just when we hoped that the student loan issue would go away, it’s baaaack!

Well, maybe yes and maybe no.

Who is exposed? How exposed?

“Act II” will likely have the most relevance for a fraction of student loan borrowers. One expert told me that of the $1.2 trillion in student loans, maybe $150 billion of it is floating-rate paper. Who are these debtors? A recent study by Brookings suggests that graduate students account for a big portion of the growth in student debt. And much of the student floating rate loans are issued in the private debt market. Who borrows there? We have less clarity about this market. But we can guess that it includes people who are shut out of the U.S. government grants and loans, which are mainly fixed-rate and which exclude foreign citizens. International students have grown in significance as a clientele of American graduate degree programs, especially in math, science, engineering—and business. Such students are highly desirable to America’s universities: they are hardworking, dedicated, and pioneering (see my earlier post on international students). In short, international graduates of American graduate schools may be like the canary in the coal mine, a barometer of possible distress from rising interest rates.

The pain of rising interest rates is really a matter of how much debt relative to the student’s income. Here’s a rough example: suppose two students, each of whom accumulated $100,000 in floating-rate debt to finance a graduate degree. But the two graduates follow very different career paths. Let’s say that Jeanne earns $100,000 per year upon graduation; Greg earns $50,000 per year.

  Jeanne Greg
Student Loan Debt $100,000 $100,000
Annual Salary $100,000 $ 50,000
Debt Service before (5%, 10 years) $ 12,720 $ 12,720
Debt Service after (8%, 10 years) $ 14,560 $ 14,560
Change in Debt Service $ 1,840 $ 1,840
Debt Service/Salary before 13% 25%
Debt Service/Salary after 15% 29%
Increase in Debt Service as a % of Salary 2% 4%

The extra $1,840 per year may not be stressful for Jeanne; but Greg will feel the pinch. Jeanne is cushioned by her larger salary; Greg may have to make sacrifices.

This little example overlooks one other important factor: borrowers whose credit rating is decent or has improved will find it desirable to refinance their loans. Most students in school look the same: no earnings. Therefore, one size fits all; the borrowers with strong prospects subsidize the weak. After graduation and a year or two of earnings, it makes sense for the strong debtor to consolidate into a cheaper private fixed rate loan. Strong earning graduates can “afford” to give up some of the “social insurance” such as loan forgiveness, etc on the federal loans in return for a lower priced private loan.  

Getting a “fix”

If you borrowed floating-rate debt, what should you do? Hoping for a government bailout is wishful thinking. Perhaps you could turn to friends and family to help you pay off the loan. Or perhaps you could sell some assets to pay down your debt. Or, if you find today’s interest burden to be manageable, you could lock in today’s interest rate by swapping your floating rate debt for fixed-rate debt. To “fix” your floating-rate loan is a matter of borrowing a new fixed-rate loan and using the proceeds to pay off the floating rate loan.

In the abstract, the question of whether to “fix” your floating-rate debt hinges on a simple comparison: are you better off with fixed or floating rates? Usually, this translates into looking at the cost of borrowing under either type of loan. On the Internet, you can find calculators that will tell you the effective interest rate on a loan. You might think that it’s as simple as comparing the fixed and floating rates of interest. Generally, interest on fixed rate loans is higher than on floating rate loans of comparable term. One might conclude that the decision is easy. Not true. Price isn’t the only thing that matters.

You should also care about risk. Under the floating rate loan, you bear the uncertainty about the future movement of interest rates. And as of today, you face asymmetric risk. Interest rates are at historic lows and have only one way to go: up. With the fixed-rate loan, you have immunized yourself against the uncertainty of future interest rate movements. In effect, you’ve bought an insurance policy in your fixed-rate loan, and that insurance is valuable. Because of this, fixed-rate loans often carry a higher rate of interest than do floating-rate loans: the extra bit of interest expense is like a premium on an insurance policy that immunizes you against rising interest rates. Thus, the simple comparison of the nominal fixed and floating interest rates on student loans makes no sense—the problem is more complicated than that.

Estimating the value of the insurance in a fixed-rate loan entails making assumptions about the future path of interest rates. Doing that requires math and modeling skills beyond the reach of most debtors. [Hint to the MBA reader: this kind of analysis requires a robust simulation model.]

Fortunately, years of observations about how markets price securities tell us that the student debtor who holds a floating rate loan will find it moreadvantageous to “fix” the loan if:

  • You have a lot of debt, relative to your current income.

  • You have a lot of uncertainty about future interest rates.

  • Or you believe that interest rates will rise, rise a lot, and/or rise suddenly.

  • The loan is longer, rather than shorter, in duration—ten years or more certainly qualifies.

  • You can find a fixed interest rate that fits your budget today.

  • The special fees and other costs to refinance are not onerous.

  • Your own income stream (salary plus bonus, for example) is not so stable and/or is unlikely to grow.

  • You don’t have many assets on which you could draw for support if interest rates spike upward.

Under such circumstances, the insurance embedded in a fixed-rate loan will be worth a lot. In any event, the right course of action will depend on your individual circumstances. If any of this describes you, it could be worthwhile to see a financial adviser to gain a detailed assessment of the risk and cost of loan alternatives.

Why fix now?

Still, I can hear the objections. Swapping fixed for floating-rate student loans looks like betting on the future path of interest rates. Even sophisticated finance professionals say that forecasting interest rates is a fool’s errand. And some economists believe that rates won’t rise when the Fed unleashes the debt markets because bad economic news in Europe, Asia, and Latin America suggest that deflation has a powerful grip on the global economy: interest rates could stay low for years. Even America’s growth rate seems unlikely to juice up the debt markets. GDP growth is anemic. The dollar is strengthening, which will dampen exports. The stock market is at historic highs and seems more likely to subside than grow. And political gridlock in Washington, at least through 2016, assures us that fiscal stimulus is unlikely. All of this is not a scenario for rising interest rates. Thus, objectors would say that if you have floating-rate debt, don’t worry, be happy.

My response is that most consumers don’t know what they don’t know. Would you rather eat well (with lower interest rates) or sleep well (immunized against higher interest rates)? [1] If we’ve learned anything from the Global Financial Crisis and Great Recession, it is that history tends to repeat itself, or at least rhyme; that bearish financial trends can move faster than you can outrun them; and that conditions can remain bad longer than you can remain solvent. If this discussion makes you uneasy in some way, then now could be a good time to fix your floating rate debt.

[Disclaimer: I am a Dean of a business school who cares about his students and graduates. I’m not a licensed investment or financial adviser. The reader should seek the counsel of an adviser who can apply sophisticated modeling to one’s specific circumstances.]

  1. To reflect further on this, see Darden’s Biz Basics video of Ken Eades, ‘Eat Well vs. Sleep Well’. []

Bubble Watching

The S&P500 Index crossed the 2000-mark this past week, fueling more wonderment at the lofty levels of equity prices. As I explained in a recent op-ed, high prices may be telling us something new about innovation that we don’t already know. But in recent meetings with investors, business leaders, and academics, there remains an undercurrent of concern about bubble-like conditions in the markets. The dominant question is, “How do we know if we’re in a bubble?”

What’s a “bubble”?

You must start with the fact that “bubble” conveys a general notion of excessive pricing and irrational investing—but it lends no clarity or bright line to distinguish really dangerous conditions from benign optimism. Peter Garber notes “bubble …is a fuzzy word filled with import but lacking a solid operational definition….if we have a serious misforecast of asset prices we might then say that there is a bubble. This is no more than saying that there is something happening that we cannot explain, which we normally call a random disturbance. In asset pricing studies, we give it a name—bubble—and appeal to unverifiable psychological stories.” [1]

Thus, the absence of science about bubbles summons two rules for bubble-watchers:

· Humility foremost. You have no crystal ball. Therefore, one’s assertions—no matter how emphatically believed—must be tempered with respect for the enormous uncertainty surrounding them.

· Bubbles are best-known in retrospect. Alan Greenspan, Chairman of the Federal Reserve, with all the power and informational advantage of that office, was unpersuaded of a bubble in housing in the mid-2000s. His memoir is worthy reading, on the difficulty of identifying bubbles and of implementing policies to deflate them.

How do we know if we’re in a bubble?

In our book, The Panic of 1907, Sean Carr and I summarized some prominent attributes near the peak of a bubble in asset prices:

  1. Dramatic rise in prices reflected in aggressively high valuation multiples and transactions compared to historical averages.
  2. Buoyant demand for the assets: oversubscribed initial public offerings in equities, numerous participants in auctions for companies, natural resources, and real estate.
  3. Optimism about the sustainability of future price increases.
  4. Entry into the market by naïve, inexperienced, and unsophisticated investors. Bernard Baruch sold his stocks in early 1929 when he started receiving unsolicited stock tips from his shoeshine boy.
  5. Talk of a “new paradigm” rendering long-standing investment maxims invalid. Such was the case during the Internet boom. “This time it’s different” is one of the most dangerous attitudes in investing.
  6. Jumbo deals. These deals change the competitive landscape and/or frame of reference for investors. Travelers Insurance acquired Citicorp in 1998, signaling the end of the regulatory ban on universal banking. The audacity of jumbo deals serves to reinforce “new paradigm” thinking.
  7. Innovations in instruments, institutions, and markets. Leading up to 1907 were the creation of trusts, new national consumer-branded products, and the spread of the telephone, automobile, and household electricity. Joseph Schumpeter heavily emphasized the role of the inventor and entrepreneur in triggering new phases in economic cycles.
  8. Aggressive financing. Banks lower their credit standards to the benefit of borrowers who lots of cheap credit.
  9. Regulators and other watchdogs relax their monitoring of financial intermediaries and investor behavior.
  10. Positive economic news. A recent stretch of growth.
  11. Media hype and considerable popular interest. Rising prices, huge profits, jumbo deals, often to the benefit of Everyman and Everywoman, garner front-page stories.

Several of the items on this list don’t fit the bubble profile as of Labor Day weekend 2014: #10 (positive economic news/growth—few people believe the global economic fundamentals are terribly buoyant); #9 (relaxed watchdogs—the SEC, CFPB, and DOJ seem more rather than less active these days); #5 and #3 (new paradigm thinking and optimism really don’t characterize the investment buzz these days). Absent these points, conditions don’t yet look like a bull market stampede.

On the other hand, some genuine jumbo deals are recently completed or currently pending (#6: USAirlines/American, Valeant/Allergan, Burger King/Horton’s, Family Dollar/Dollar General/Dollar Tree). Global M&A volume is at a seven-year high—so is the global volume of initial public offerings.

And the value of subprime loans is growing, which may go hand-in-hand with the entry of new and inexperienced players in the markets. Recently, the New York Times reported “explosive growth” in the volume of subprime loans for the purchase of used cars.

And, as I discussed in the previous post, prices seem high relative to historical price/earnings ratios. Here’s one measure, favored by Warren Buffett, the market value of US Companies as a percent of the Gross National Product (see more at Bloomberg).


Then, too, there is the concern about aggressive financing. While the whole economy may not feel growing indebtedness, some segments are booming—see the following graph on the call loan market, which fuels equity trading (see more at


Watchful Waiting—and Learning

There is no substitute for vigilance toward bubble-like market conditions. But this doesn’t seem like one of those moments, just before the bursting of the dot-com bubble in early 2000 or the peak of the subprime bubble in 2007. Conditions could melt down for a variety of reasons, unrelated to the bursting of a bubble.

One helpful resource for paying attention to market conditions will be this year’s University of Virginia Investing Conference—November 13-14—the theme of which will be “Investing in Innovation.” Innovation is perhaps the most important foundation for growth, and PVGO. The conference will offer insights about growth prospects in fields such as information technology, energy, health care, and monetary policy. Once again, we are booking an impressive collection of speakers. As of today, speakers will include these (additional speakers are in the offing):

Charles R. Cory (MBA ’82), Chairman of Global Technology Investment Banking & Managing Director, Morgan Stanley
• Richard Fisher, President & CEO, Federal Reserve Bank of Dallas (schedule pending)
• W. Barnes Hauptfuhrer (MBA/JD ’81), Chief Executive Officer, Chapter IV Investors
• Robert J. Hariri, Founder, Chairman & Chief Scientific Officer, Celgene Cellular Therapeutics
• Ned Hooper (MBA ’94), Partner, Centerview Capital
• Robert J. Hugin (MBA ’85), Chairman & CEO, Celgene Corporation
• Samuel D. Isaly, Managing Partner, OrbiMed
• Nancy Lazar, Partner, Cornerstone Macro
• John Siegel, Partner, Columbia Capital
• Michael Sola, Portfolio Manager, T. Rowe Price
• Kathy Warden, Corporate Vice President and President, Northrop Grumman Information Systems  

Today’s financial market conditions are due to a blend of buoyant investor psychology and genuine growth opportunities. If so, this puts a high premium on thinking critically about investment themes, trends, and market sentiment. Conferences are one excellent means of sharpening your own thinking. Join us in November!

  1. Peter M. Garber, Famous first Bubbles: The Fundamentals of Early Manias, Cambridge: The MIT Press, 2001, page 4. []
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Preparing Women for Leadership in Business–What Darden Is Doing

Last April, I blogged about my reflections on the status of women in business schools. My post followed various meetings I’d had with a range of corporate leaders, Admirals in the Navy, and senior counselors in the White House. I was struck by the unanimity with which they expressed the need to develop more women in the rising generation of leaders. I concluded that there is increased consensus regarding the importance of gender diversity and inclusion in American business society and that no one thinks the progress is acceptable—nor do I.

Women hold up half the sky, but they account for only a small fraction of senior and middle-managers, corporate directors, partners of professional service firms, entrepreneurs, etc. The reasons for this have to do with cultural, legal, and economic factors, many of which seem to be changing. Although the women’s movement, which began several decades ago, has led to increased opportunities for women, there still needs to be a larger societal commitment to developing extraordinary women leaders. This development should begin in early childhood and progress through post-secondary education. Leading business schools have a vital role to play.

Where is Darden in this? In 2015, Darden will celebrate 50 years of women business leaders. We want Darden to be the go-to place for women executives of exceptional talent and promise. We have undertaken a range of initiatives to prepare women for leadership in business. Let me describe these.

As preface to this sketch it is useful to state the obvious: schools will find it easy to do something—the question is, “Are schools doing the right things, to ensure that women are well-prepared to excel in business school and in the business world?” As I discussed earlier, b-schools are focused on trying to determine what is right. Therefore, this feels like a pivotal moment. No less is happening within Darden. There is no checklist, guidebook, or user’s manual that dictates what business schools should do right. Thus, Darden is intentionally trying a range of experiments, projects, and prototypes. Distinguishing doing the right thing from doing just something is our intention – both within Darden and in the world of practice. This requires careful design and evaluation that inform ongoing efforts. What follows is not just a list of some things, but rather our path toward the right things.

Consider these activities under three umbrellas:

· Educating women about business school and encouraging them to enroll at Darden.

· Providing opportunities for women to develop as leaders while they are students at Darden. The necessary conditions for development are intrinsic motivation and opportunity, which is why we emphasize “opportunities.”

· Empowering women graduates of Darden to advance their careers through networking and professional development

1. Darden aims to educate women about business school and to encourage them to enroll.

Program for Prospective Student Women. Darden is known for having a tight-knit community. In order to give women in the pipeline a more personalized introduction, the Office of Admissions and the Graduate Women in Business club offer the 1:1 Program for prospective women students. The program pairs prospects with a current woman student mentor in late summer to facilitate a one-on-one connection with a member of the Darden community. Previous participants have found that this is not only an excellent way to learn about the School, the student community and the myriad academic opportunities and resources but also to explore the many issues facing women pursuing graduate business education.

Sponsor of the Forté Foundation. Darden is proud to be a founding partner of the Forté Foundation, a non-profit consortium of top companies and leading business schools committed to helping women pursue leadership roles in business. While every woman at Darden can join Forté, each member school also has the opportunity to select Forté Fellows, who receive merit-based scholarships based on their outstanding professional, academic, and personal accomplishments. In addition to the financial support provided through fellowships awarded by individual Forté member schools ($45MM in scholarships awarded to 2,300+ recipients), Fellows gain exposure to leading companies in the Forté network, as well as an immediate peer group of Fellows that extends beyond their individual business school. Darden typically has approximately 40 Fellows per academic year. All women at Darden with a $10,000 scholarship or greater are Forté Fellows.

2. Darden provides opportunities for women to develop as leaders while they are students.

Darden’s student club, Graduate Women in Business (GWiB), is leading a range of initiatives.

  • Mentoring program. Each year, First Year (FY) and Second Year (SY) female students are paired up as mentor and mentee. This provides incoming women with a resource to ask any and all questions they may have – from how to best prepare a case to getting ready for an interview.
  • Relationships across Grounds. GWiB has connected with the University of Virginia McIntire School of Commerce’s women students in a networking and mentoring capacity. Seven Darden women sat on a panel hosted by McIntire to discuss the process of applying for graduate business school.
  • Annual conference and workshops. GWiB is active in sponsoring a well-attended annual conference, which often features alumnae in key speaking roles. They also sponsor smaller workshops and panels throughout the academic year. Additionally, GWiB held a negotiations workshop with Professor Melissa Thomas-Hunt to teach students how to become better at negotiating their pay/salary/signing offers.
  • Friends of GWiB. The impetus for the program was for women students to invite their male peers to be involved in the conversation about women in the workplace. Men have always been welcome to join as traditional GWiB members, but this initiative was developed to actively seek them out. Some of the goals and activities include: educating male peers on what exactly women discuss when they gather in professional settings and educate them on general “workplace issues”; including faculty members who have had a breadth of experience and could provide an alternate view and voice to the conversation.
  • Points of contact. GWiB has a 1:1 program that matches prospective women applicants with current women students.
  • C-suite contacts. Several prominent alumnae have reached out to GWiB to host small group gatherings in Charlottesville to provide engaging conversation and advice.

Women in Success Seminar (Professors Luann Lynch and Mary Margaret Frank). A popular seminar last academic year, it entailed field interviews of men and women business leaders; class discussions of readings on women leaders and the challenges facing women in leadership (such as Sheryl Sandberg’s book, Lean In); and essays on women leaders and personal reflections on success.

NOLS Leadership Program. Professor Yael Grushka-Cockayne led a National Outdoor Leadership School (NOLS) leadership program that took place in January. Each student had the opportunity to lead a daily expedition in the Arizona desert. Thirteen students attended (7 men and 6 women) and one alumna. The course focused on developing leadership through leveraging diversity and inclusion.

Newly Transformed Career Education for All Current Students. A series of discovery forums take place the first week on Grounds for FY students. The forums include:

· Perspectives on Career Success

· Being an Adviser to Corporations: Careers in Consulting and Investment Banking

· Becoming a Corporate Leader I: Careers in Marketing, Strategy and Business Development

· Becoming a Corporate Leader II: Careers in Finance, Operations and Supply

· Becoming an Owner: Paths to Consider Now and in the Future

· Mission-Driven and Global Opportunities: Perspectives from Darden’s Institute for Business in Society and Center for Global Initiatives

Second Year Coaches. A unique feature of Darden’s career development offerings is the SY Coaches program. In addition to being assigned a professional, functionally-aligned career advisor, all FY students are assigned a SY coach based on various industry categories.

Leadership Speaker Series. Darden actively seeks to bring to Grounds women who are role models of leadership. Four of the nine speakers last academic year were women:

Martina Hund-Mejean (MBA ’88), Chief Financial Officer of MasterCard Worldwide; Carolyn Miles (MBA ’88), President & CEO of Save the Children; Lorna Donatone, Chief Operating Officer, Sodexho; and Sharon Decker, Secretary of Commerce of the State of North Carolina.

Surveys of the Experience of Women Students and Alumnae. We conducted focus group meetings on the experiences of women in their learning teams. In addition, we prepared a survey with GWiB of SY women about their FY experience. Darden’s alumnae are more engaged than the alumnae population of business schools in general.

Women@Darden Initiative. The purpose of this initiative is to examine and recommend actions to improve the quality of the Darden experience for prospective and current women students and alumnae. We are at the beginning stages of an enterprise-wide effort to engage faculty, staff, alumnae and other key stakeholders on how Darden can bolster our women students and alumnae. Under the umbrella of a steering committee, three sub-committees will examine:

· Women student recruitment and admission. Increasing the number and quality of women students is very important to sustaining the strength of Darden’s learning experience. We will focus on increasing the number and quality of women prospectives applying to Darden. The aim is to increase the number of women students enrolled in all of Darden’s MBA programs.

· The experience of women both inside and outside of the classroom. Improving the Darden experience for women students benefits all students. We focus on curricular and co-curricular content and student experiences. And we will consider how to increase financial aid for women students.

· Alumnae engagement. A robust alumnae engagement effort is central to honoring Darden’s mission of developing and inspiring responsible leaders and advancing knowledge. We aim to increase the quantity and quality of alumnae engagement opportunities.

3. Darden empowers alumnae to advance their careers through networking and professional development.

Darden’s Armstrong Center for Alumni Career Services (ACS) provides career help for all alumni—and specific programs for assisting women:

  • One-on-one Career Advising and Coaching. ACS provides unlimited number of sessions to our alumni to assist in all areas of career management with the majority of that coaching in the area of career transition. In this capacity, ACS has worked with 33% of our total number of alumnae. Coaching on how to “stay in,” “get back in,” or “rise in rank” is common.
  • “Re-entering the Workforce” workshop for alumnae conducted by Darden ACS. This two-month long workshop (including pre-work, two day-long sessions and follow-up) has been delivered to over 200 participants in seven locations (Washington, D.C., Boston, NYC, London, Palo Alto, Atlanta, Chicago). The workshop includes self-assessment, evaluation of work-life fit issues, the redevelopment of one’s professional brand and job search techniques after a hiatus.
  • Pay Equity. ACS and CDC coaches assist individuals one-on-one with salary negotiations – assisting in research of market rates and strategies to negotiate for the highest possible compensation often pointing out gender differences in negotiating and helping women avoid common pitfalls.

Volunteer leadership positions on Darden’s boards, advisory groups, and local clubs. We are actively recruiting alumnae into leadership positions. This affords them opportunities to network and exercise skills such as communication, advocacy, facilitation, and team-building. This summer, Elizabeth Weymouth (MBA ’94) was elected Vice Chair of the Darden School Foundation Board of Trustees. She will rise to Chair of the Board in 2016. And the Women@Darden initiative has energized more alumnae to organize new local groups.

Alumnae Engagement. Generally, we are striving to improve and strengthen Darden’s engagement with alumnae. The mission of the alumnae groups in Washington, D.C. and New York is to:

· Engage – through networking and relationship building, our objective is to keep Darden’s women support for one another strong and valuable.

· Education – through relevant and provocative presentations, readings and discussions, our goal is to keep Darden as a key component of our ongoing professional development.

· Service – through monthly interactions, our objective is to collectively create opportunities to serve the Darden community.

In addition, alumnae groups are forming in other localities.

Executive Education. Darden’s highly ranked Executive Education open-enrollment programs focus on leadership development, including The Women’s Leadership Program and The Executive Program. Other programs include: Leading Organizational Effectiveness; Managing Individual and Organizational Change; Power and Leadership: Getting Below the Surface; and Servant Leadership: A Path to High Performance.


Darden’s Class of 2014 graduated last May having achieved some milestones. These include having the highest percentage of women enrolled (35%) and the highest percentage of women in positions of leadership of clubs and student government (60%) in Darden’s history. Women presidents ran some of the School’s largest clubs, including the Consulting Club, Marketing Club, Finance Club and General Management and Operations Club.

I heard the Class of 2014 student evaluation of their learning experience at Darden: women expressed a high level of satisfaction, consistent with men. And this month, two of the three new faculty members hired this year are women—adding strength to a great team of women professors. These and other metrics suggest that Darden is making strides in contributing to the preparation of women for leadership in business. I’m pleased to report that the Class of 2016, which we enrolled last week, is poised to make its mark.

…And I would say that work remains to be done, for Darden and all b-schools. Excellence is a moving target. The initiatives that schools take today are merely a foundation for strides we must make tomorrow. What is at stake is not just the role of women, but rather the caliber of all leadership: Sheryl Sandberg, COO of Facebook, wrote, “In the future there will be no female leaders. There will just be leaders.”

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From Quarterdeck to Forecastle: Welcome to the Class of 2016

[This afternoon, I welcomed the Darden Class of 2016 to the school. What follows are approximately my remarks.]

On vacation some years ago, I signed on as a crew member of a tall ship in the North Sea. This was a reproduction of an 18th Century frigate: three masts, a great deal of rigging, and cramped quarters. We stood watch, four hours on and four hours off, so it was impossible to get a good night’s sleep. When the wind changed, everyone was put to work hoisting sails or stowing them—this had to be done, in good weather and bad. I’m not wild about heights, especially when on a rope ladder high above a rolling ship. The food, prepared by a cook, was mediocre at best. By the end of the week I was exhausted.

When I returned from vacation, I told a friend that I had had a great experience. He shook his head in disbelief and said, “What was great about it? You’re a leader at Darden but you spent the whole week as an unpaid laborer who had to take orders from the captain. Lots of shouting; do this and do that. There was no rest and relaxation. What were you thinking?” My reply to him contains some ideas that are relevant as you embark on your own journey at Darden.

I should say that my reflections on that experience have continued over time. Ann Landers, the advice columnist, famously said that in school you get the lesson first and then the test; but in life, you get the test first and then the lesson. That sailing experience was a real test. And the learnings have followed.

In Herman Melville’s novel, Moby-Dick, the main character explains why he wants to go to sea as an ordinary sailor. The year is maybe 1850 and the voyage is to be on a whaler. It is hard and dangerous work. Why would someone do this? The lead character explains,

“I always go to sea as a sailor, because of the wholesome exercise and pure air of the fore-castle deck. …for the most part the Commodore on the quarter-deck gets his atmosphere at second hand from the sailors on the forecastle. He thinks he breathes it first; but not so. In much the same way do the commonalty lead their leaders in many other things, at the same time that the leaders little suspect it.”

Think about it. Melville is saying that the folks away from the seat of power know something more than do the leaders. To go down from the important place you are used to, to a place at the front of the ship teaches you things that you can’t get on the quarterdeck.

The post on the frigate that I liked best was standing watch at the bowsprit, the forward-most point of the ship. You are there all alone looking forward through the fog, trying to understand what you are sailing into and then communicating it in a way that the people back on the quarterdeck can understand. You are the first person to get a glimpse of the future. This is a view that can’t be had elsewhere on the boat. And the experience is magical. The playwright, Eugene O’Neill, wrote,

“I lay on the bowsprit, with the water foaming into spume under me, the masts with every sail white in the moonlight towering above me. I became drunk with the beauty and singing rhythm of it, and for a moment lost myself. Actually lost my life. I was set free—dissolved in the sea, became white sails and flying spray, became beauty and rhythm and the high dim-starred sky—I belonged within a unity and joy to life itself.”

To feel “lost,” “drunk,” and “dissolved in the sea” is akin to what many artists, athletes, and leaders have described as the sense of flow : fully immersed, energized, and feeling intense joy of being at the head of their field, the top of their game, at the point of the bowsprit. It’s easy to see why flow might happen at the bowsprit: it’s where one is looking out to the wider world, looking ahead, and indeed, looking inside oneself. At that kind of moment, you are fully invested in what you do.

Metaphorically, the bowsprit and forecastle represent the frontier of your field or your enterprise. It’s the place where one learns the most. Today, so much of what we value about business and capitalism—such as invention, efficiency, effectiveness, adaptability—depends on how organizations and people learn. Melville challenges us that the best learning may not be on the quarterdeck (at the back of a ship), but rather on the forecastle (toward the front).

The big idea here is that from time to time in one’s life, one must step down from the quarterdeck in order to take risks, get out in front, learn, and grow as a leader. The quarterdeck can be its own little world, freighted with tradition, security, and old assumptions about how the world works. From the back of the ship, it is certainly more difficult to look out ahead.

I’m telling you this because you-all are like me on the frigate: most of you have left interesting and comfortable circumstances to get out to the frontier of ideas and learning. You’ve been here one week and are probably wondering what you’ve gotten yourselves into.

This is the right time in your lives to be here. Many graduates have volunteered that Darden was a transformational experience; it changed their lives for the better. I believe you will say the same.

So, to conclude the story, what I replied to my astonished friend went something like this: “It was a great experience because of what I learned about myself and others; I grew in confidence. And I gained an incredible new perspective on teamwork and nature that couldn’t be obtained any other way. I learned that followers can lead the leaders. When you lose yourself in a worthy challenge, you can actually find yourself. And I found that the forecastle can be a better place than the quarterdeck. I had to live the experience to learn those insights.”

My experience on the frigate suggests the frame of mind you will need so that 21 months from now, you can say that Darden was a “great experience.”

  • Trust the process. Trust that the questioning by the professors is leading you somewhere. They want to help. And you came to study with the world’s best teachers. So, form a relationship with them that feeds your development. Don’t look for grandiose speeches, easy answers, or compliments; look for wise and candid feedback. Accept and admire professors who demand your very best.

  • Be present. I saw a sign once at a Las Vegas casino. It was hanging over the roulette table and said, “You must be present to win.” This meant that you could not place your bets and then leave the table to get a drink or see a friend, and return later to pick up your winnings. You had to be present when the winnings were declared, in order to get them. So it is at Darden. You must be present to win. “Being present” means being mindful: self-aware of your state of mind and your impact on others. And it means being socially aware of what’s going on around you. You can’t “zone out” and get the rich transformational experience that Darden offers. Mindfulness is one of the top attributes of high-performing leaders. So this is good practice for your future. When I describe Darden as a “high touch” community, I’m referring to a community where students, faculty, and staff are present and engaged actively in the learning process. “Being present” also means engaging others who may be very different from yourself—a different race, nationality, sexual orientation, or gender for instance. Make a serious effort to see the world through their eyes. Befriend those people. Share the Darden experience with them. If you find yourself drawn constantly to a few classmates just like yourself, you aren’t really present. If you don’t test your assumptions about people different from yourself, you aren’t really present. If at the end of two years, your comfort zone is no larger than it is today, you have not been really present.

  • It’s a marathon, not a sprint. Pace yourself. There are lots of enticing activities at Darden. And you don’t need to do them all at once. Find your sustainable stride and patiently head toward the finish line.

One final reflection: the bowsprit and forecastle are vivid metaphors for me yet today. As most of you know, in 11 months, I’ll make a transition from the quarterdeck of the Dean’s office to go back to the forecastle of faculty and staff. I’m content and think this makes great sense for Darden and for my life at this point.

So if I can model something for you this year, it is the virtue of periodically stepping down from the quarterdeck and moving to the forward-most point of your environment or enterprise. Being Dean has been tremendously fulfilling. And I’d like to get back on the bowsprit, looking forward through the fog. In the next 21 months, you and I will be there together.

I believe that you will succeed beyond your dreams if you commit very deeply to the experience ahead of you. Godspeed and good luck.

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Pricey U.S. Equities—Implied Innovation?

What are we to make of the following graphs? Figure 1 presents the long historical view of the Price-to-Earnings ratio on the S&P500 Index. Figure 2 presents a similar view, adjusting the P/E ratio for the impact of inflation on earnings.

Figure 1
Standard Price/Earnings Ratio for the S&P500 Index (average of all companies)
Current S&P 500 PE Ratio: 19.04 -0.19 (-0.97%)
4:29 pm EDT, Tue Aug 5

Mean: 15.52  
Median: 14.56  
Min: 5.31 (Dec 1917)
Max: 123.73 (May 2009)

Price to earnings ratio, based on trailing twelve month “as reported” earnings.
Current PE is estimated from latest reported earnings and current market price.
Source: Robert Shiller and his book Irrational Exuberance for historic S&P 500 PE Ratio.

Figure 2
Cyclically-Adjusted Price-Earnings Ratio for the S&P500 Companies


Current Shiller PE Ratio: 25.39 -0.25 (-0.97%)
4:29 pm EDT, Tue Aug 5

Mean: 16.54  
Median: 15.93  
Min: 4.78 (Dec 1920)
Max: 44.19 (Dec 1999)

Shiller PE ratio for the S&P 500.

Price earnings ratio is based on average inflation-adjusted earnings from the previous 10 years, known as the Cyclically Adjusted PE Ratio (CAPE Ratio), Shiller PE Ratio, or PE 10 — FAQ.

Data courtesy of Robert Shiller from his book, Irrational Exuberance.

Against these measures, stock prices today seem high. Looking over the last 130 years, you see big spikes in P/E ratios suggesting bubbles “irrational exuberance” in advance of capital market instability (1929 stock market crash, the Internet bust of 2000, and the Panic of 2008). Apart from those extreme events, the P/E ratios of 19x to 25x are relatively high. Is this a run-up to another bubble? What questions should the canny observer ask about high P/E ratios?

Let me frame a (wonkish) reply in terms of finance theory, which suggests that the size of a multiple is driven by two main factors: risk and expected growth. For instance, the widely-used Price/Earnings multiple can be decomposed into two factors:

Stock Price/E(EPS) = 1/r + PVGO/E(EPS)

E(EPS) is the earnings per share expected to be reported next year. The factor “r” is the required return on equity, which is determined by risk. And PVGO [1] is the present value of growth opportunities per share, an estimate of today’s value of investments expected to be made in the future. The term, “growth company,” is not defined by the growth rate of sales, earnings or assets, but by the size of PVGO relative to the market value of equity.

In other words, the P/E ratios of “growth firms” are typically sizable, and driven significantly by attractive future growth opportunities. One can decompose other ratios in a similar fashion. But the key idea is that multiples reflect important economic phenomena. To judge whether a multiple is appropriate, one should look into the underlying economic fundamentals and critically evaluate the assumptions of the model. [2]

So, let’s consider the possibilities. Suppose that “r” is 10%, the going risk-adjusted rate of equity return for the average low-growth firm, such as a public utility. Therefore, 1/r would equal 10.0. Compared to the average P/E ratios for the S&P500 (either 19 or 25), this implies that the present value of growth opportunities these days is simply enormous, accounting for 45-60% of the value of the S&P500. What might explain this huge growth component?

One possibility that you hear mooted on financial talk shows is that the market is “overheated,” “getting ahead of its skis,” and even, “a bubble.” We’ve certainly seen frothy conditions before and shouldn’t be surprised to see them again. The problem is that you could summon up some kind of psychological explanation for market conditions virtually any time. Psychology is always useful as a warning flag; but it won’t tell the investor exactly what to do. Generally, if you think that the market is getting overheated, you might cash out, buy put options, or sell short. But research suggests that trying to time the market by trading actively is an easy way to lose money.

A second possibility is that investors embrace some realistic growth phenomena that justify these huge PVGOs. If so, the canny investor should try to identify the source of these growth opportunities. One helpful resource will be this year’s University of Virginia Investing Conference —November 13-14—the theme of which will be “Investing in Innovation.” Innovation is perhaps the most important foundation for growth, and PVGO. The conference will offer insights about growth prospects in fields such as information technology, energy, health care, and monetary policy. Once again, we are booking an impressive collection of speakers. As of today, speakers will include these (additional speaker are in the offing):

  • Charles R. Cory (MBA ’82), Chairman of Global Technology Investment Banking & Managing Director, Morgan Stanley
  • Richard Fisher, President & CEO, Federal Reserve Bank of Dallas (schedule pending)
  • W. Barnes Hauptfuhrer (MBA/JD ’81), Chief Executive Officer, Chapter IV Investors
  • Robert J. Hariri, Founder, Chairman & Chief Scientific Officer, Celgene Cellular Therapeutics
  • Ned Hooper (MBA ’94), Partner, Centerview Capital
  • Robert J. Hugin (MBA ’85), Chairman & CEO, Celgene Corporation
  • Samuel D. Isaly, Managing Partner, OrbiMed
  • Nancy Lazar, Partner, Cornerstone Macro
  • John Siegel, Partner, Columbia Capital
  • Michael Sola, Portfolio Manager, T. Rowe Price
  • Kathy Warden, Corporate Vice President and President, Northrop Grumman Information Systems

“Early bird” registration discounts end tomorrow, August 8th. Sign up this week to get the highest return on your conference investment.

In all probability, today’s high P/E multiples are due to a blend of buoyant investor psychology and genuine growth opportunities. If so, this puts a high premium on thinking critically about investment themes, trends, and market sentiment. Conferences are one excellent means of sharpening your own thinking. Join us in November!

  1. Stewart Myers originally suggested the important role of growth options in the valuation of the firm. See his paper, “Determinants of Corporate Borrowing,” Journal of Financial Economics, 5:146-175 (1977). The decomposition of P/E presented here is discussed more fully by Myers in his book with Richard Brealey and Franklin Allen, Principles of Corporate Finance. []
  2. Though widely used, and simple to use, investing on the basis of P/E multiples is vulnerable to several potential problems, such as the dependence on GAAP accounting practices, which afford managers rather wide latitude in reporting the financial results of the firm. Also, the P/E ratio can be computed using backward-looking or forward-looking earnings. For growing firms, the difference in financial performance between the year just past and the year ahead will be material. In addition, a focus on Earnings per Share ignores important effects of capital investment, investment in working capital, and depreciation. []
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Should I work for this company?

The summer is a time of endings and beginnings. We’re about to enroll the Darden Class of 2016,
among whom many students are looking to end one career path and embark on another. Alums I’ve been
speaking with recently, took vacations, found the time to stop and reflect, and confronted the itch to
change employers. And for the Darden Class of 2015, who have had summer internships, this week is
probably the closing act: companies will start to make full-time offers. About two-thirds of Darden’s
summer interns get offers of permanent employment from their summer jobs. Common to all of these groups is a fundamental question: “Should I work for this company?”  Let me help you reflect on this. [1]

How not to decide

Start by dispensing with some of the most frequently-heard—and worst—reasons to sign on, such as money, power, fame, convenience, or lifestyle. Mind you, these aren’t trivial; and a partner or mentor may place them at the head of the parade. But these considerations can prompt one to make a decision that seems justified in the short run, but that in the long run may be regretted.

Where to start

The way to begin is to start with a sense of purpose, or intent, or calling. As Stephen Covey once wrote, you must “start with the end in view.” For a few people, this “end” will entail a clear vision of exactly what one will be doing in a few decades. But for most of us, the “end” will amount to an intuition about the kind of impact one wants to make, the kind of legacy one would want to leave, or the help one would want to give to others. If you have a vision or intuition about your “end” in view, everything else will be noise. As the Psalmist said, “Without a vision, the people wander.” If you don’t know where you’re going, any road will take you there.

The guiding principle

If you address the question of where to work with the end in view, then you get focused on how to get there. This focus drives you to one overarching principle: You should go where you believe that you can you do your best work. Thinking in terms of one’s “best work” necessarily focuses on the impact of one’s life and helps to define priorities. I don’t mean to suggest that defining one’s focus and priorities is easy. But finding the signal despite the noise is indispensable to charting a course. Think about the implications of this principle:

  • Go. This begs you to reflect on how you will leave where you are now, and how you will gain access to the place you should be. Is now the time to go? Is your team depending on you to finish some vital work? Will you slam the door behind you, and leave bitter co-workers behind? Leaving well is one of the hardest challenges in a career.
  • Where. In what sense is your best work you contingent on a place? Is it a physical location, close to friends and family? A virtual space that grants you connectivity to people who amplify your talents? A spiritual space that gets you in the zone for great work?
  • You. Are you waiting for someone else to decide for you? You must own the issue. Are you straining over the decision because you simply don’t want to face it?
  • Believe. This takes courage. When you decide to work for a company you must embrace a lot of uncertainty about the industry, company, your supervisor, and even yourself. Have you thoroughly assessed all of these uncertainties? Some are certainly groundless. But there may be good cause for doubts, and perhaps some fears. Ultimately, to decide requires a stroke of faith. Some people gain that faith through serendipity, “signs,” or a feeling of being called, a nagging idea that just won’t go away.
  • Work. What is the work that you want to do? Like to do? Are prepared to do? Will this company let you do it? Or at least grow into it? And let’s not define “work” too narrowly. Your life’s work could also include serving a community, nurturing loved ones, or repairing some nagging interpersonal problem. Think about the balance of all of these possible demands over the course of your life.
  • Best. This is the most important word in the whole question. You shouldn’t settle for just any old work. Life is too short for that. One wants to have an impact with one’s life and arrive at a good end. The notion of “best” should trigger some deep reflection on how you define success. If you start with some sense of the end in view, your best work will start to define itself.


“You should go where you believe that you can do your best work.” Spoken plainly, this principle seems obvious, hardly a slap-the-forehead insight. Yet in my decades of working with students, alums, and searchers of all kinds, I observe how slowly people come around to this conclusion. Often late in life, they will wrap their career choices based on money, power, fame, convenience and lifestyle in some rationalization about “best work”–but it always sounds hollow.

It is better to start with the end in view. That way, the steps to get there tend to define themselves.

  1. Those interns who are in the home stretch and really hope to gain an offer might find some of my past
    advice helpful. There is a range of things one can do to improve the odds of getting an offer:

    A. Actually ask for the job. Too many summer interns simply don’t “close the sale” (see this.)
    B. Become known. “Lean in,” in Sheryl Sandberg’s parlance. Too many summer interns lean back and fade out (see this.)
    C. Finish at a sprint; don’t coast to the end. Research suggests that the most recent perceptions are very influential to decision-makers. Even if you’re finished with your summer project, walk around and volunteer to help anyone else (see this.)
    D. Quell any sense of entitlement; you must earn the offer. In most settings, arrogance damages, rather than strengthens, career prospects (see this.)
    E. Even if the news isn’t good, exit gracefully. (See this.)


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Why Explorers Matter

Today, we observe the 45th anniversary of the first moon landing (see this for details on the observance). The world justly lionizes Buzz Aldrin, Neil Armstrong, and Michael Collins for achieving a manned lunar landing. And Armstrong’s declaration, “One small step for man; one giant leap for mankind,” remains an iconic marker for the advancement of civilization in the 20th Century. The observance looks like a media event; and much of it seems to be about technology (rockets), big organizations (NASA), geopolitics (the space race), and national will (JFK’s aspiration to put a man on the moon). All of this strikes me the way I encounter anodyne restaurant reviews, political tracts, or economics theories: where are the real people in all of that? What was the experience of the whole team? With what did they contend? What can we learn from them that could be relevant to the rest of us on Earth in our daily lives? Ultimately, the observance asks a radical question: generally, why do explorers matter?

The obvious—but wrong—answer is that explorers matter most because of what they found. Don’t misunderstand me: what explorers found was important and changed history. But in so many cases, the odds seem high that someone else would have made the same discovery in the same era if the explorer we now celebrate had not done so. For instance, records suggest that Chinese Admiral Zheng discovered America in 1421 (see this). Was it a matter of luck to one and misfortune to the other that we today celebrate Columbus instead of Zheng?

I think we should celebrate explorers, but for reasons that transcend what they discovered. Let’s give more attention to the who and how.

First, explorers matter because they can illuminate attributes of leadership. The need for leadership in so many areas is so great today. Explorers can help to orient us to the kind of people the world needs. Mind you, great explorers in the past tended to harbor great flaws; these are not obvious candidates for sainthood. But consider what we learn from the story of Apollo 13, or from the early test pilots and astronauts profiled in Tom Wolfe’s The Right Stuff. Then, too, there is the remarkable story of Shackleton’s voyage to Antarctica, told in Alfred Lansing’s Endurance, and in Roland Huntford’s The Last Place on Earth. Explorers show us that great leadership is less about self-aggrandizement, risk-seeking behavior, or the determination to reach a goal at all costs. Instead, explorers show us the huge importance of team-building, careful planning, faultless execution, and courage.

Second, explorers expand our ambition. They inspire us to think beyond what is possible. How many young girls have been emboldened by astronaut, Sally Ride, to study STEM subjects and become explorers themselves? The song, Northwest Passage, by Stan Rogers describes a modern-day traveler seeking to re-create the trip of Sir John Franklin, who sought unsuccessfully a northwest passage through the Arctic Ocean to Asia—what moves the traveler is

“To find the hand of Franklin reaching for the Beaufort Sea, Tracing one warm line through a land so wild and savage,/And make a Northwest Passage to the sea.”

Finally, the experience of explorers matters because they show how to prevail in the face of great adversity. Indeed, in the experience of explorers, the adversity seems to be the main point. Montaigne said, “It is the journey, not the arrival, that matters.” We want to know how the explorers contended with the journey: the hardship, doubts, setbacks, and even success; we relish the stories of explorers because they show the rest of us how to go far away, and come back again. It is the return of the explorers that creates the example of testing the limits—in Stan Rogers’ song, “to find there but the road back home again.”

History teaches us that we worship heroes at our own risk. But what passes today for the celebration of a profound achievement in the annals of exploration misses some big points. Such commemorations need to bring us face to face with lessons about leadership, ambition, and adversity that the present generation can harness in its own outbound journeys.


The song, Northwest Passage, by Stan Rogers is well worth listening to this day, to give an alternative tone to the media event. The chorus of the song is:

Ah, for just one time I would take the Northwest Passage,
To find the hand of Franklin reaching for the Beaufort Sea,
Tracing one warm line through a land so wild and savage,
And make a Northwest Passage to the sea.

Other verses include:


Westward from the Davis Strait ’tis there ’twas said to lie,
A sea route to the orient, for which so many died,
Seeking gold and glory, leaving weathered broken bones,
And a long forgotten lonely cairn of stones.


Three centuries thereafter, I take passage over land,
In the footsteps of brave Kelso, where his “sea of flowers” began,
Watching cities rise before me, then behind me sink again,
This tardiest explorer driving hard across the plain.


And through the night, behind the wheel, the mileage clicking west,
I think upon Mackenzie, David Thompson and the rest,
Who cracked the mountain ramparts and did show a path for me,
To race the roaring Fraser to the sea.


How then am I so different from the first men through this way,
Like them I left a settled life, I threw it all away,
To seek a Northwest Passage at the call of many men,
To find there but the road back home again.


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The Frontier of Technology and the Educational Experience

“We shape our tools. Thereafter, our tools shape us.”
— Tobias Kinnebrew, Bot & Dolly

The onrush of new technology into higher education is, to most academicians, both wonderful and terrible—not least for the reasons that Kinnebrew suggests: the new tools presage a different world and a different “us.” Now we have “Web 3.0,” according to Tim O’Reilly at a conference last month. O’Reilly is a technology publisher and commentator and the origin of the phrase, “Web 2.0.” What is this new Internet? And what does it portend for higher education?

Most likely this: more of the same, only more so. In previous posts, I have argued that new technology will accelerate the pace of change of higher education, that such change will entail a displacement of instructors and institutions whose material can be easily digitized, and that the emergent champions will be those who excel at digital delivery of knowledge, and those who excel at the delivery of superior in-person learning experiences—to be stuck in the middle will be very dangerous. Acceleration. Displacement. Polarization. My hunch is that “Web 3.0” will advance all of that.

The New New Thing

To refresh your memory, “Web 1.0” gave connectivity of the written word, such as email and blogs. It entailed narrow-band connectivity available through dial-up services such as AOL. Then came “Web 2.0,” which gave connectivity of video, music, and which required more bandwidth and the communication technology to process immense volumes of data. The Internet took on a two-way publishing model in which Internet users contribute content, rather than a one-way system akin to book publishing, in which Web site owners post and publish content directly for a separate audience to read—YouTube is the canonical example.

“Web 2.0” made possible asynchronous education such as Khan Academy and the “flipped classroom” now so popular in K-12 education circles. It also exploded digital instruction into higher education: MOOCs, hybrid program designs (that mixed digital and person-to-person (P2P) instruction), Skype-based learning teams, learning management systems such as Canvas, Cloud-based storage of records and materials, digitized books and case studies, and PowerPoint mashups of video, text, voice, animation, etc. What made all this possible was the growth of bandwidth, and the incredible decline in the cost of computer processing power and of storage of information.

“Web 3.0” is the “Internet of Things” (IoT), which recognizes that Internet connectivity extends well beyond desktop-to-desktop toward a host of different possible things: tablets, smartphones, smart watches, personal activity monitors (e.g. Fitbits), robots in manufacturing plants, and glasses (e.g., Google Glass). Sensors are growing in ubiquity and connecting to form intelligent systems based in the Internet. Tablet computers are widely distributed across military units in Iraq and Afghanistan. A new-model jet engine by General Electric contains over 100 sensors and generates over a terabyte of data per flight; these data are uploaded via the Internet to promote predictive maintenance (i.e., rather than maintenance that is purely reactive to breakdowns). Application software enables the individual person or the large enterprise to customize the engagement with the Internet. The torrent of data that descends on the service providers has riveted decision-makers on “big data” and the need for sophisticated analytics to enable even better provision of service in the future. What made all this possible is the near-zero cost of information storage, the spread of sensors that record the experience of humans, organizations, and things; the invention of hardware devices that achieve the greater distribution information generated by sensors; the development of apps that permit greater customization; and generally, the diminishing cost of innovation. The cost of experimentation with hardware and software is so low that design and development of new software and devices is being pushed out of large enterprises and into the garages, basements, “Fab Labs,” “hackathons,” and “Maker DIY.”

These themes about “Web 3.0” and IoT were explored last month in the Solid Conference, produced by O’Reilly Media. [1] The premise of the conference was that “Physical things—machines, devices, components—are about to experience a profound transformation. The Internet fundamentally changed how software is developed and deployed, and now hardware is on the brink of a similar disruption. Consumers, already carrying smart phones and driving cars that park themselves, have come to demand more from their objects than ever before. They expect their belongings to “know” them, to interact with them, and to adapt to their needs. Industry is realizing that smart networked machines can bring them the efficiencies and new capabilities to do more, faster, and cheaper…Hardware and software are fusing into a single fluid entity….this collision of software and hardware is fueling the creation of a software-enhanced, networked, physical world.” The “Things” form a more intelligent system rather than just a connection of objects. Hardware is starting to resemble software in its capacity to be edited, to adapt to changing needs; and software is starting to resemble hardware (e.g. smartphones don’t have buttons, they have icons on a touch screen). The result is increasingly intelligent information technology systems that are growing in their ubiquity, customizability, and sensing capacity:

  • Networked automation. Prompted by sensors, machines communicate with machines from the consumer’s point of purchase back to the assembly plant, back to the component fabricators, back to the suppliers of raw materials. RFID and GPS systems allow computers to track the movement of supplies from distant locations to sufficient precision that it gives new meaning to “just in time” management. Within manufacturing plants, processes are increasingly automated: machines monitor workflow, inventory levels, quality, and maintenance. Beth Comstock of General Electric calls this the “selfless machine: a machine will sense other machines and what the changing environment requires that the machine should do. No machine is an island.” And machines remove workers from dangerous settings: Rio Tinto described the use of mining vehicles controlled by drivers in the safety of a distant facility. These examples may seem unsurprising and prosaic, since mechanization has been a steady theme for decades. But what is notable today is the extent to which machines and information systems substitute for human interaction and to which humans expect their machines to anticipate their expectations. Reducing human intervention has proved to be a boon to users of taxicabs—just ask clients of Uber—or to people trying to transfer money—just ask clients of Bitcoin.

  • Synthesis of virtual and physical. Google, a software company, bought seven robotics manufacturers last year. In 2008, the number of devices connected to the Internet surpassed the number of people on earth. One of the most provocative examples of the melting boundary between software and the physical world comes from Autodesk, the software company. Carl Bass, the CEO, explained that DNA, or genetic code, is simply a physical manifestation of software. Extending the company’s capabilities in software development, Autodesk has the ability to “print” physical DNA. Bass said, “the age of synthetic biologic manufacturing is right in front of us.” Is Autodesk in software or hardware or biotech?

  • Knowingness. Systems that can recognize a person’s individual identity can adapt to that person’s preferences. Inventors demonstrated systems that adjust household lighting, heating and ventilation. Similarly, systems can aggregate across many individuals to frame insights about mass behavior—inventors demonstrated a system that can distill exabytes of purchasing behavior from iTunes to graphically display the presence of jazz enthusiasts by district in a metropolitan area.

The Limit to Things.

How far will the “Web 3.0” go in displacing the work of humans? It is limited by its ability to produce transformational experiences, to generate high standards of craft, and to create ideas.

Experiences. At the end of the Solid conference, I took a hike. Literally. is one of the best active vacation tour guides on the planet and took me and six others on an exploration of some mountainous terrain along the Amalfi coast in Italy. Heart-pounding trail-climbs and descents. Spectacular vistas. The scent of wild garlic, rosemary, and fennel; the feel of wild orchids between the fingertips; the taste of homemade pasta, mozzarella, and cappuccino. What’s more, the experience was shared with the likes of a physician, two research chemists, a corporate manager, and two homemakers. We corrected one-another’s broken Italian, shared jokes, collaborated on load-bearing, map-reading, and direction-finding, compared perceptions about the surroundings, and challenged assumptions on virtually all subjects—it felt like a walking graduate seminar. I was transformed by the experience: new sensations and their synthesis into something quite impactful.

High Standards of Craft. Can “Web 3.0” define its own standards of excellence? Can it judge true excellence, as opposed to just “good enough” compared to some peers? A highlight of the Solid conference was a presentation by Richard Isaacs, who carries the title of “Organ Builder” at C.B. Fisk, a leading manufacturer of pipe organs. Each of these instruments is one-of-a-kind, a work of art. Isaacs asked, “What has changed in organ-building over the past 150 years?” Relatively little. A tracker organ connects keys to pipes by mechanical means which produces an extraordinary ability of the musician to “feel” the very complex instrument at work, in turn which enables highly sophisticated performance. Fisk’s instruments embody extraordinary craftsmanship.

Ideation. The new book, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, by Eric Brynjolfsson and Andrew McAfee of MIT, forecasts the increasing automation of “routine” tasks: “this leads to job polarization: a collapse in demand for middle-income jobs, while non-routine cognitive jobs (such as financial analysis) and non-routine manual jobs (like hairdressing) have held up relatively well.” (p. 139). The authors emphasize that the cognitive work that will fare particularly well in the increasingly machine-dominated environment will be the non-routine cognitive jobs:

We’ve never seen a truly creative machine, or an entrepreneurial one, or an innovative one. We’ve seen software that could create lines of English text that rhymed, but none that could write a true poem…Programs that can write clean prose are amazing achievements, but we’ve not yet seen one that can figure out what to write about next. We’ve also never seen software that could create good software; so far, attempts at this have been abject failures. These activities have one thing in common: ideation, or coming up with new ideas or concepts. To be more precise, we should probably say good new ideas or concepts…Ideation in its many forms is an area today where humans have a comparative advantage over machines. Scientists come up with the hypotheses. Journalists sniff out a good story. Chefs add a new dish to the menu. Engineers on a factory floor figure out why a machine is no longer working properly. Steve Jobs and his colleagues at Apple figure out what kind of tablet computer we actually want. …Ideation, creativity, and innovation are often described as ‘thinking outside the box,’ and this characterization indicates another large and reasonably sustainable advantage of human over digital labor. Computers and robots remain lousy at doing anything outside the frame of their programming. (pages 191-2)

These limiting factors define that “high ground” to which traditional educational institutions will need to climb. Ironically, this ground has always been the domain of higher education; but as the mandate of higher education broadened after World War II, this ground was overgrown by other mandates that are now being seized by digitization. Such other mandates include vocational preparation, compensating for a worsening K-12 educational system in America, and “edutainment.”


As Tobias Kinnebrew said, “We shape our tools. Thereafter, our tools shape us.” That is the dominant message for higher education from “Web 3.0.” Here are some speculative implications for how the tools will shape educators:

  • One way becomes two way. The digital services will not be tied only to computers, but will be delivered through a variety of devices, such a mobile phones, eyeglasses, and earbuds. The Internet of Things will permit educators to engage digitally with students in ways that may feel more intimate and attentive to the learning experience. For instance, this will yield greater opportunity to monitor the reaction of students to their lessons and their progress. Software intelligence is rising above the level of a single instructor, department, or institution. Think of the extensive knowledge that Amazon, Apple, or Netflix accumulates about its customers. Without doubt, networks and markets are accumulating that kind of information about our students. Data accumulation will morph into service offerings to students that are ubiquitous and are increasingly customized to their needs.
  • Automation and Ideation. Digital delivery will serve tools and objective information (such as names, dates, and formulas). If IBM’s Watson computer can learn to beat the world’s reigning Jeopardy champion (i.e., a challenge based on ambiguous questions depending on encyclopedic knowledge of trivia), it may be possible to digitize some aspects of mentoring students. Still, I doubt the ability of machines to recognize subtle variations in human emotion and to empathize appropriately. Above all, P2P (person-to-person) instruction best serves to prepare students for ideation and critical thinking—delivering on this is not a stretch for most colleges and universities worth their name. Big data is very interesting. Big wisdom is even more interesting.
  • Innovation at the fringe rather than the center. Incumbency may not be an advantage. So much of innovation today is occurring on the periphery of the industries rather than by the major players. In previous posts, I have argued that the high cost of digital instruction, and the inevitably rising quality expectations would redound to the advantage of deep-pocketed leaders in the field. But the rise of disruptive new players can eliminate the middlemen and edge out the incumbents (think of Uber versus the big city taxi monopolies, Bitcoin versus banks, or Autodesk versus big pharma).
  • Governance and accountability Much of Brynjolfsson and McAfee’s argument says that we should get better at working with smart machines. Probably so. But let’s not teach students to cede accountability or moral responsibility for the consequences of their collaboration with machines. At issue here is, who shall be the master? A related fact is that today, every school is a software enterprise. Design and delivery of the learning experience for students will increasingly entail a software interface in addition to a human face. If, as the foregoing points suggest, that interface will be an integral part of the curriculum, should not the faculty govern it?
  1. Disclosure: my son, Jonathan, was co-chair of the conference. []
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Graduation 2014: Listen Well

My job this afternoon is to convene the proceedings, set a tone, and introduce three speakers. As popular perceptions might have it, we ought to have three case discussions. Instead of three student speeches, we would have three cold-calls. Maybe a few power points. And perhaps an online simulation thrown in for good measure. Darden’s reputation in the broader world is about active, not passive, learning; about debating with your peers; and about figuring things out for yourself. All true, so far.

And Darden is also about listening really well. That’s what I’m going to ask you to do for our three speakers this afternoon. More importantly, that’s what I’m going to ask you to do for the rest of your lives.

Listening well seems to be a fading art. We’ve learned over the past few weeks about commencement speakers who were disinvited because some students didn’t want to listen to them. Yet free speech is a core value at universities. You might disagree with a speaker, but it won’t hurt you to listen. The newspapers this past week reported the retirement of Barbara Walters, the TV interviewer; she was called one of “America’s last great listeners.” Why is she the last? Aren’t people listening anymore? The likes of McKinsey & Company, Darden Dean’s Executive Fellow, Kevin Sharer, and WikiHow have weighed in on the subject of listening well. Sources like these raise a host of great tactics for good listening. For instance, show respect, establish eye contact, stop talking and be silent, encourage the speaker with body language and active listening techniques, suspend judgment, and so on. These are useful tactics, ones that you have heard about and try to practice. But I think there is more.

There is too much noise and not enough respectful silence for others to unfold their ideas. One sees countless errors such as willful distraction, arriving late, leaving early, pointless interruption, etc. Some of this might be elicited by the speakers themselves. The fact is that we are awash in noise: spam, push marketing, ephemeral stuff. And lazy listening passively digests it all.

Great listening is a process of separating the signal from noise, of discerning what resonates or disagrees with you, and of triangulating or testing what you hear with what you know. Signal, resonance, triangulation.

You can adapt great listening not only to an encounter with one person, but also to the world at large. My advice is that whatever you do next, find some quiet where you can spend part of each day to separate signal from noise. Susan Cain, in her book, Quiet, offers a powerful argument in favor of reflection, and deep listening. In effect, she says to think like an introvert. Introverts think to speak; extroverts speak to think.

Next, I urge you to sample widely across sources of information that you tap each day. Get out of your daily ‘me, ’ that echo chamber of favorite websites, Facebook pages, chat rooms and so on that simply reinforce what you already know and believe. Finally, I urge you to drill deep into what resonates.

So much of the advice for new graduates is salted with action-taking, risk-taking, go get ‘em, and so on. What these messages miss is any sensible direction for the path on which you are commencing. As the saying is, “If you don’t know where you are going, any road will take you there.” The prerequisite to setting any good direction is not just planning, or data analysis, or scenario testing. No, the very first step is to listen really well. Remember to focus on signal, resonance, and triangulation.

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